This Week’s Battle Plan

The more it shows you really care.

     –Offspring, from their song “Self
Esteem”

Last Sunday night, we spoke and looked at the set-ups for the upcoming
day. The list was very small. It was the weekend after Thanksgiving
and outside of the big Wednesday move, the markets had been quiet.
When we do our lists, we are primarily looking for Windows set-ups. As
you may know, this has become the lead equities strategy I use to
short-term trade stocks (1-3 days). Last Sunday, the only thing that
stood out were clusters of potential sell signals in health care
stocks. Paul asked me if we should be taking so many signals in the
same sector. My answer was “yes,” as history has shown that
when multiple stocks have Window set up in one industry, that industry
tends to have very big moves. So far, so good.

I’m sharing this story with you for many reasons. First, everyone who
trades — no matter how successful they are — has great days that
turn into good days (and worse). Paul knows what he is doing. The
guy is good. Very good. He simply missed two trades at the same
time. But as he stated to me, it will never happen again. And I
believe him. He suffered. It shows he cares. It happens to the best
traders all the time.

One of the members told me a story earlier in the year which I shared
with you in a previous Battle Plan and I will share it again here.
This member was lucky enough to get the chance to spend some time
learning how to trade directly from one of the best S&P traders
out there. One day, this trader lost money. A lot of money. Nothing
worked. At the end of the day she asked him what happened. His reply
was “I traded like an asshole.” Yes, everyone has bad
days. Even the very best out there. And as you can see from his
language, you suffer when it happens. But the reason you get to play
this game year after year is to make damn well sure it doesn’t become
a habit. Because if it does….

Second, I’ve stressed over and over about making sure technology
doesn’t bite you and doesn’t impact your trading. Back-ups for
everything are needed. The missed trade on ATH was a database problem
that should not happen again. We’re adding a back-up database to
double check the signals each night. My strongest advice to you is to
create back-up sources for everything, including reaching your broker,
getting your feeds, creating your database, and any other technology
you rely upon.

The third point I’ll make is the most important. I tell this to
everyone. And it’s the same way I will teach my children to trade when
they get older. The money is secondary. As crazy as this
sounds, it really is. Mastery is first. When you have strategies with
an edge, then it only comes down to mastering the execution of those
strategies. My kids will learn to trade ONE STRATEGY with 100 shares.
And, if I have my way, they won’t get to two strategies until
they can prove they have mastered the first. And they won’t get to 300
shares until they can prove they can make money consistently with 100.
When they can do this, then they’ll expand further. But they will make
all their mistakes with 100 shares and on one strategy. They’ll learn
to drive the beat-up Volkswagen before the get into a Ferrari. Because
if I’m right, it will take them quite a while to master trading 100
shares in one strategy. And then, if I’m again correct, it will take a
little less time to learn how to master trading 300 shares. But once
they have this down, they will have a skill-set that will last them a
lifetime.

Yes, of course, this game is about making money. It’s the only way to
keep score, and it’s the main (but hopefully not only) reason we
trade. But, the money from trading is secondary to the mastery of
trading. Because when you have the mastery part down, the money will
come. And for some traders, it comes in very big ways. And beginning
in two weeks, we’re going to introduce you to some of these people…

The Big Saturday Interview

We’re in the midst of expanding the site and adding many new features.
Features that will hopefully successfully impact the way you trade in
2003. One feature we are adding is our Big Saturday Interview.
Every other week we will be interviewing some of the legends and
giants of Wall Street. Big name traders, hedge fund managers and money
managers. Our goal is to get them to share with us the reasons for
their tremendous success. First up will be Leon Levy. For those of you
who don’t know the name, Mr. Levy is the founder of Odyssey Partners,
one of the most successful hedge funds in history. He is also Chairman
of the very successful Oppenheimer Funds. His hedge funds performance
was extraordinary, over 30% annualized return after costs for 15
years. His success both as a mutual fund manager and a hedge fund
manager has placed him onto the Forbes 400 list of the richest
Americans. I’m sure we will all learn an immense amount from a man of
this caliber. The Big Saturday Interview will be our
opportunity to learn from individuals like this and many other
successful traders who have achieved great success in the markets.

Some Business

We have launched the second module of the “Haggerty Training
Series.” You can find information on it here.
Later in the month, Kevin’s third training module (it will be on
trading opening reversals) will be live. Kevin’s plan is to bring you
five modules which will encompass all his trading, and this should be
completed by the first quarter of next year. Also, my Windows
Module was just made live and tomorrow is the last day to take
advantage of the pre-release price. Over the next month we will be
releasing a number of new educational products to help further improve
your trading. These, combined with the new features on the site,
should help you take your trading to all-new levels in 2003.

Finale

Trading profits second,
trading mastery first. That’s always the goal. Making almost 7%
for the day and trading poorly is worse than breaking even for the day
and trading perfectly. It’s hard for some people to swallow, but
it’s true. If you are like many other thousands of people who use this
site, you have succeeded (in many cases in a very big way) in other
walks of life. Your success came from mastering what you did. You were
likely the best amongst the best. You may still be in that position.
You’re there because you have mastered your field. The money followed.
The same goes for trading. The profits will likely follow, especially
if you do everything perfectly, day after day. A lofty goal. And a
goal, when achieved (and as you will see in the Big Saturday
Interviews) that leads to tremendous success.